Real Estate Dual Agency Concepts Quiz

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Questions and Answers

What is the primary reason why rejecting subagency might be detrimental to a client's interests?

It requires the client to pay a higher commission to the real estate agent.

It prevents the client from receiving informed consent regarding the agency relationship.

It creates an undisclosed dual agency situation, which is illegal in all states.

It can prevent the property from being listed on MLS, limiting its visibility and potential buyers. (correct)

What does Informed Consent refer to in the context of dual agency?

A written agreement where both the buyer and seller acknowledge their understanding of dual agency. (correct)

A verbal agreement where both the buyer and seller agree to a dual agency arrangement.

An agreement from the client to be represented by the agent without any prior disclosures about dual agency.

A situation where the agent acts as a dual agent without the explicit knowledge of both the buyer and seller.

Which of the following is NOT a benefit of a dual agency arrangement for a real estate agent?

The agent can save time by managing both sides of the transaction.

The agent can establish closer relationships with both the buyer and seller. (correct)

The agent can potentially promote a faster closing of the transaction.

The agent receives the full commission without having to share it.

What is a designated sales agent in the context of dual agency?

An agent appointed by the firm to solely represent the interests of the seller in a transaction. (A), An agent appointed by the firm to solely represent the interests of the buyer in a transaction. (C) Signup and view all the answers

What is the consequence of failing to disclose a dual agency relationship in New York State?

The agent can face legal penalties and potential lawsuits from the affected parties. (C) Signup and view all the answers

What happens to the fiduciary responsibilities of an agent to a Principal once the transaction is finalized?

The agent's responsibilities cease, but they are required to maintain confidentiality regarding information shared by the Principal. (A) Signup and view all the answers

When is a dual agency situation permissible in a real estate transaction?

When both the buyer and the seller provide their consent in writing, acknowledging the risks and benefits involved. (B) Signup and view all the answers

What is the term for the fee an agent receives for referring clients or services to another agent?

Referral commission (B) Signup and view all the answers

Which of the following is NOT a fiduciary duty owed by an agent to their principal?

Disclosure (A) Signup and view all the answers

What type of agency is created by a written or oral agreement between the principal and the agent?

Expressed Agency (B) Signup and view all the answers

What is an agreement between members of a trade to exclude other members from fair participation in the trade called?

Group Boycott (B) Signup and view all the answers

What is the principle that prevents a person from asserting something contrary to what is implied by a previous action or statement?

Estoppel (B) Signup and view all the answers

Which of the following is NOT considered a form of anticompetitive business practice?

Designated Agency (A) Signup and view all the answers

What does the term 'informed consent' refer to in real estate?

An agreement to proceed with a transaction after all relevant facts are disclosed (B) Signup and view all the answers

What does it mean for a real estate firm to have an 'in-house' dual agency situation?

The firm has a designated agent representing the seller and another designated agent representing the buyer (A) Signup and view all the answers

Which of these scenarios is an example of the fiduciary duty of obedience?

An agent follows a client's instructions to accept an offer, even though the agent believes the offer is too low. (C) Signup and view all the answers

Study Notes

Real Estate Agency and Dual Agency

MLS Listing: Listing a property on the Multiple Listing Service (MLS) automatically makes the buyer's agent a subagent to the seller, creating a dual agency.
Client Rejection: Rejecting dual agency may prevent the property from being listed on the MLS, potentially reducing visibility and limiting the sale price and thus not in the best interest of the client.
Informed Consent: Both buyer and seller must provide written consent for dual agency, detailing the known facts and risks of the transaction in advance.
Undisclosed Dual Agency: Illegal in all states, this situation involves the agent acting as both buyer and seller's agent without their knowledge or consent.
Dual Agency Consent: Both buyer and seller need written consent for a dual agency; otherwise, the NY Real Property Law is violated.
Dual Agent Commission: The dual agent receives the full commission, which may be a motivation to reduce the commission to increase the probability of the transaction. This saves time in the transaction.

Disclosure Form: A written form disclosing dual agency risks and benefits informs the client.
Withdrawal from Dual Agency: If either party changes their mind about dual agency, they can withdraw their consent.
Designated Sales Agent: In "in-house" dual agency situations, a firm can appoint different agents to only represent the seller or the buyer.

Agent Responsibilities and Termination

Referral Commissions: Agents can receive referral commissions, with disclosure to the client.
Fiduciary Responsibilities: Agents' fiduciary responsibilities to the client end when the transaction is completed, but confidentiality regarding shared information remains.
Accountability: An agent needs to be responsible in any transaction.
Advance Consent to Dual Agency: This means that the seller or buyer agrees to dual agency in advance of the transaction.
Confidentiality and Loyalty: Agents must maintain confidentiality and act in a way that places the client's interests above all others ( including themselves).
Cooperating Agent: An agent who helps with the sale of a property (e.g., subagent, buyer agent, dual agent).

Legal Principles and Practices

Disclosure Requirements: Disclosure must take place regarding potential defects or problems with the property.
Estoppel: This is a principle that prevents someone from asserting something contrary to their earlier actions or statements.
Expressed Agency: The formal and agreed-upon association between principal and agent.
Group Boycott: An agreement among members to exclude others.
Market Allocation: Members agree to refrain from competition in certain market areas.
Obedience: An agent's duty to follow the client's instructions in good faith.
Price-Fixing: A conspiracy to set prices for services or goods.

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Description

Test your knowledge on the principles of dual agency in real estate, focusing on informed consent, agency relationships, and fiduciary responsibilities. This quiz covers important aspects such as subagency rejection, designated sales agents, and disclosure requirements in New York State.